Sunday, September 4, 2011

Our Big Fat Government

It's Time For A Federal Diet
Our federal government has grown too big for it's britches.

This summer, our national debt reached the tipping point, placing the United States on the road not unlike that of Greece, Ireland, Spain and Italy. We are now a debtor nation.

"Debt as of July 31 totaled $14.342 trillion. That was made up of $9.756 trillion held by the public and $4.587 trillion the U.S. government owes itself (intergovernmental borrowing, largely from the Social Security and Medicare trust funds to the general fund). GDP—the value of all of the goods and services produced in the United States—in 2010 was $14.5265 trillion. With the Treasury’s additional borrowings of $238 billion so far in August, the total of all debt outstanding has now increased to $14.5807. That’s $54.2 billion more than average 2010 U.S. GDP, the last year for which we have final estimates on GDP from the U.S. Department of Commerce."

As I write this our national debt is $14,685,462, 200,507. The debt per US Citizen is $47,408, and the debt per American Tax Payer is $131,055. And it is growing exponentially as I write this blog. Our government spends a staggering $3,000,000 a minute. "When Barack Obama took the oath of office twice on Jan. 20, 2009, CBS' amazing number cruncher Mark Knoller reports, the national debt was $10,626,000,000,000."

To place our debt in perspective from the same link, ..."Numbers with that many digits are hard to grasp, even for a Harvard head. So, let's put it another way:

One billion seconds ago Bill Clinton was nearing the end of his two terms and George W. Bush's baseball collection was still on the shelves in the Austin governor's office.

The nation's debt increased $4.9 trillion under President Bush too, btw. But it took him 2,648 days to do it. Obama will surpass that sum during this term.

Now, how to portray a trillion, or 1,000 billions. One trillion seconds ago much of North America was still covered by ice sheets hundreds of feet thick..."

If you would like to take a look at your specific government cost, there is a calculator found here, and you can calculate your portiom of future federal spending, your estimated share of future federal taxes, and what they could have been worth.

While compiling links for this blog, I spent countless hours searching for an official site that would list exactly how many government offices and agencies you and I pay to staff. Countless searches, I thought surely there should be a simple list provided by the US Government, the only official one that I found was an A-Z listing of all government agencies, with Municipal, County, State and Federal Government offices all listed together. However one very ambitious blogger has accumulated a more than exhaustive detailed list of Federal Government Agencies and it can be found here.

This study by CATO Institute reviews the cost of federal employees, and the disparity between federal employment salaries wages and benefits and those of the private sector. "...With projections of huge federal deficits for years to come, policymakers should scour the budget looking for places to cut spending. One area to find savings is the generous compensation paid to the federal government's 2.1 million civilian workers1 Total wages and benefits paid to executive branch civilians amounted to $230 billion in 2010, indicating that compensation is a major federal expense that can be trimmed.2During the last decade, compensation of federal employees rose much faster than compensation of private-sector employees. As a consequence, the average federal civilian worker now earns twice as much in wages and benefits as the average worker in the U.S. private sector.3 A recent job-to-job comparison found that federal workers earned higher wages than did private-sector workers in four-fifths of the occupations examined.4..."

Our nations credit has been downgraded by Standard and Poors as a result of unprecedented spending by the 110th and 111th Congresses due to the lack of our federal government having a balanced budget, or a budget at all. Standard and Poors stated “...political brinkmanship” in the debate over the debt had made the U.S. government’s ability to manage its finances “less stable, less effective and less predictable.” It said the bipartisan agreement reached this week to find at least $2.1 trillion in budget savings “fell short” of what was necessary to tame the nation’s debt over time and predicted that leaders would not be likely to achieve more savings in the future."

In March of 2010 the GAO (General Accounting Office) published a limited study of reviewing duplication of services programs and subsidies of the Federal Government, and this is just the tip of the iceberg.

This link from National Review Online says, ''...in Economic Policy Journal, economists Yann Algan, Pierre Cahuc, and Andre Zylberberg looked at the impact of public employment on overall labor-market performance. The authors use data for a sample of OECD countries from 1960 to 2000, and they find that, on average, the creation of 100 public jobs eliminated about 150 private-sector jobs, decreased overall labor-market participation slightly, and increased by about 33 the number of unemployed workers..."

Here is the link, from the introduction to the abstract (all that you can see without paying, or special access to the site, and the introduction to the study: "We explore the consequences of public employment for labour market performance. Theory suggests that public employment may not only crowd out private employment, but also increase overall unemployment if, by offering attractive working conditions, it draws additional individuals into the labour force. Empirical evidence from a sample of OECD countries in the 1960-2000 period suggests that, on average, creation of 100 public jobs may have eliminated about 150 private sector jobs, slightly decreased labour market participation, and increased by about 33 the number of unemployed workers. Theoretical considerations and empirical evidence, however, suggest that the crowding out effect of public jobs on private jobs is only significant in countries where public production is highly substitutable to private activities and the public sector offers more attractive wages and/or other benefits than the private labour market."

The Federal Government employs whose wages and benefits exceed those of the private sector,and few if any are ever terminated. ..."Death — rather than poor performance, misconduct or layoffs — is the primary threat to job security at the Environmental Protection Agency, the Small Business Administration, the Department of Housing and Urban Development, the Office of Management and Budget and a dozen other federal operations. The federal government fired 0.55% of its workers in the budget year that ended Sept. 30 — 11,668 employees in its 2.1 million workforce. Research shows that the private sector fires about 3% of workers annually for poor performance, says John Palguta, former research chief at the federal Merit Systems Protection Board, which handles federal firing disputes..."

It is obvious we are not going to begin to fix this nation's fiscal nightmare until we address the size and scope of our Federal Government. It is well past time to make our Federal Government smaller and leaner.All efforts to address the necessary elimination of government agencies that have outlived their original mandate, elimination of programs will produce a deafening roar from the left, and much kicking and screaming.

It is doubtful that the Super Committee will have the courage to address the issues.

Until our leadership seriously addresses entitlements, and making the Federal Government smaller and start privatizing and eliminate huge government bureaucracies, force agencies to write a budget like private industry and produce a balance budget, nothing will change.

It is time for the government to live within it's means. We must hold our government fiscally accountable and it is 235 years past the time for a Balanced Budget Amendment to the Constitution.

4 comments:

Great article Melody. You are correct about the spending needing to be reduced, but it must actually be reduced, not reduce the level of increase as is now the case. I also have started a series of articles on the steps needed to get control of our runaway Federal government, and the first change needed is in the accounting system itself, changing from the current baseline budgeting system to a zero based system.

The article discussing this issue can be found at: http://alpipkin.com/blog/?p=1269. There are other articles discussing other aspects of federal spending.

Melody, had to chuckle a little bit when you started talking about how much overlap there is in Government. A number of years ago I was talking to very frustrated developer on a job site. He bought a mountain and planned to develop it.

There were some legitimate environmental parts of the track were tunneled from mining operations a century before.. some areas had piles of various byproducts that weren't considered healthy.. Most of it wasn't obvious, the woods had come back and covered it up...

He was frustrated.. before he could put a shovel in the ground he had to get approvals from 23o plus federal. state and local regulatory agencies... Each one had to power to stop the project.